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Tracker report confirms UK property sales soared in first quarter of 2016
Property sales in the UK were 10% higher in the first quarter of 2016, boosted by a rush in demand for buy to let and second homes due to a stamp duty surcharge, new figures show. Some 275,002 transactions were registered between January and March, up 10% from the previous first quarter record from 2014, when 251,042 transactions were logged, according to the latest Conveyancing Market Tracker report from Search Acumen. The report points out that the 2014 rush was due to a surge of activity ahead of the Mortgage Market Review (MMR) rule changes in April 2014, as consumers moved to secure mortgage finance and complete deals before affordability checks were tightened. The latest tracker, which uses Land Registry data, also shows that sales volumes in the first three months of 2016 were also up 15% year on year, as conveyancers pushed second home buyers and landlords to completion before the introduction of the new 3% stamp duty surcharge which was introduced on 01 April 2016. The report points out that the potential for a time lag due to extended timelines for Land Registry applications being completed means the higher volume of conveyancing transactions may also continue into the second quarter of 2016. Year on year, those firms ranked 11 to 20 in terms of transactions completed experienced the biggest growth from the first quarter of 2015 to the first quarter of 2016, with their transaction volumes rising 24% from 801 to 994 on average. Firms ranked from 21 to 50 experienced the second best year on year growth rate, with average sales in the first quarter up from 551 to 665, a rise of 21%. Overall, the top 1,000 firms in the market experienced 16% annual growth, compared with 11% outside the top 1,000. It means that the aggregate market share for the top five firms has now been 6% or less for each of the last five quarters since the fourth quarter of 2014 as competition has heated up further down the ranks. ‘Conveyancers’ services have been in high demand so far this year as buyers of second homes and buy to let properties have created a stampede to beat the April 2016 stamp duty deadline,’ said Mark Riddick, chairman of Search Acumen. He pointed out that the artificial stimulus of government intervention has put major pressure on workloads, more than the firm has seen in the opening exchanges of any year since the recession and topping the pre-MMR rush of 2014. ‘Our analysis points to another interesting trend in the market, where challenger firms have enjoyed the biggest benefits of the year on year rise in transactions. As conveyancers pause for breath after the stamp duty frenzy, there may be some who are left licking their wounds or feeling their business performance could have been better,’ explained Riddick. ‘Periods like this, when services come under pressure from extra demand, can be testing all round, and it’s important for conveyancers to ensure their… Continue reading
Equity release going from strength to strength in UK
Looming interest only mortgage due dates have driven a surge in sales of lump sum equity release plans to 40% of the market in the UK in the first quarter of 2016, according to a market monitor report. Some 40% of people are taking a single lump sum advance to reduce their debts, up from 30% for the same period in 2015, the data from the report from Key Retirement shows. The firm believes that the surge is largely being driven by customers who need the maximum cash available rather than drawdown as they are using the lump sum to pay off shortfalls in interest only mortgages. Average amounts released through equity release are now £76,000 and as high as £134,000 in London. The Market Monitor, which analyses data for Equity Release Council members and non-members, for the first three months of 2016 shows record growth with total property wealth released rising to nearly £415 million, up from £341 million last year. The detailed report by the over 55’s specialist shows rising numbers of retired home owners using their property wealth to pay down increasing debts including loans, credit cards and mortgages. Around 29% of customers used some or all of the money to pay off unsecured borrowing. Debt was primarily run up on credit cards or loans while 21% used some or all of their money to clear outstanding mortgages. 14% used the money to help with regular bills. ‘The record high number of equity release plans being taken out underlines how property wealth is an important part of retirement planning,’ said Dean Mirfin, technical director at Key Retirement. ‘Pensioners are making the most of successful property investment and rising house prices to substantially improve their retirement standard of living. However retiring in debt is still a major issue. It’s long been predicted that as the first large wave of interest only mortgages maturities begins more customers will turn to equity release to plug this gap,’ he added. The average amount released to boost retirement income increased 12% to £76,115 in the three months compared with £66,730. In London the average released was nearly £134,350 up from £129,991. Home and garden improvements remained the most popular way of using the money with 63% of those releasing equity from their home doing so for this purpose. Customers are also using the money to treat family and friends with 21% citing this as a main reason. A further 28% are using the money to pay for holidays. Across the country 10 out of 12 regions saw growth in the value of property wealth released with East Anglia recording an 80% rise, North West seeing a 48% increase and a 24% rise for London. The value released dropped 29% in the North and 16% in Northern Ireland. Growth continued in plan sales with 10 regions seeing increases and just two seeing decreases. The North saw plan sales decrease by 35% and Yorkshire and Humberside saw an 11%… Continue reading
Property sentiment remains steady in the UK, latest index shows
Households across the UK perceive that the value of their home rose in May, according to the latest house price sentiment index to be published. Some 25.6% of the 1,500 households surveyed for the index from Knight Frank and Markit Economics across the UK said that the value of their home had risen over the last month, while 3.6% said that prices had fallen. This resulted in a HPSI reading of 61.0 and although this was a slight increase on the 60.1 recorded in April, it remains below the peak of 63.2 reached two years previously in May 2014. The index report says that while sentiment picked up over the course of the month, it remains in line with the longer term trend. On a three month rolling basis the HPSI reading was 60.6 compared to 59.2 for the comparable period three months previously There was a notable pick-up in perceived house price growth among those aged 18 to 24 with the index rising to 57.7 in May, up from 52.6 in April, potentially reflecting affordability concerns among this age group. Conversely, household sentiment softened among those aged over 55 month on month, although such individuals remain the most bullish when it comes to perceived price growth. According to Gráinne Gilmore, head of UK residential research at Knight Frank, the steadiness of the headline house price sentiment index during such political uncertainty over the future of the UK in the European Union is a reflection that the fundamentals of the market remain unchanged. ‘There is still an imbalance between demand and supply of housing, and for those with access to deposit payments, mortgage rates are still near record lows. However, there has been some softening in sentiment among those aged 55 and over, the age-group who have the largest equity stake in the UK housing market,’ she pointed out. ‘While the sentiment reading for this group is still one of the highest, indicating they expect prices to rise, there has been a notable fall from last month, indicating that the current economic and political climate is affecting some corners of the market,’ she added. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose slightly in May to 70.3, from 68.8 in April. Households in the South East were the most confident that prices will rise in the next 12 months at 79.5, followed by those in London at 78.2 and the East of England at 77.9. Expectations that interest rates will remain low for longer, as shown by Markit’s UK Household Finance Index, appear to have helped offset any concerns over the wider economic backdrop. Around 46% of households expect rates to rise in the next 12 months, down sharply from a peak of 78% in August 2015. Tim Moore, senior economist at Markit, explained that house price sentiment not only rose in May, but moved above the 2016 peak… Continue reading
